‘Game-changing moment’ in US foreign aid throws everything into doubt

“This is a game-changing moment, what the U.S. has done.” That’s how Marcia Wong, former deputy assistant administrator at the USAID Bureau for Humanitarian Assistance, described the Trump administration’s decision to order an immediate pause on new U.S. foreign assistance and a stop-work order for existing grants and contracts. Ever since Devex broke the news of the aid freeze last Friday, everyone from USAID contracting officers to local partners on the ground have been in a tailspin, scrambling for answers. As part of our ongoing coverage of the rapidly evolving situation, Devex hosted a Pro Briefing on Monday featuring Wong and other top experts on what President Donald Trump’s foreign aid plans mean for USAID and its partners. The event was flooded with a deluge of questions, reflecting the deep uncertainty about what happens next. Here’s a sampling: • What is the legal basis for a president to stop existing contracts made with funds approved by the U.S. Congress? • What precedent exists across the U.S. government for a stop-work of this size or scope and what can we learn from any similar experiences? • Are ongoing emergency lifesaving activities such as health care assistance expected to be halted during the stop-work period? • If we are a subcontractor that hasn't yet heard from the contractor (who would receive the order, I assume), what actions should we take? Should we prepare to speak directly with USAID? • Has there been any discussion of compliance requirements in local labor laws? • How are contractors and NGOs treated differently in terms of costs that might be covered or end up being recoverable? And what about international NGOs? • How does a stop-work order of this nature impact employees working on projects through implementing partners/USAID contractors? Do they go on unpaid leave and potentially get reengaged after the “assessment period” if projects continue? Or should contractors lay off employees given the indefinite and unprecedented nature? • How confident are we that USAID will pay invoices for work incurred (in our case, on a cooperative agreement) prior to the stop-work order? • Do we have any legal recourse to push back against cancellation of contracts? And that was just a tiny sampling. A great big void of uncertainty Many of the questions revolve around the waivers that organizations must submit to secure an exemption from the funding suspension during the three-month review period when the U.S. State Department will decide which foreign assistance programs make the cut. Two other simple questions seemed to be on everyone’s mind: Will I get paid? Or am I out of a job? “On waivers, my understanding is that that process hasn't really kicked into gear yet, and we've started going down that road, but it's just not crystallized yet,” said Robert Nichols, co-founder and managing partner at Nichols Liu LLP. “One of the issues here is that [USAID] agreement officers may say, ‘Yes, this [money] is recoverable,’ but is that actually true? They may hope it’s true, but this administration may not agree that that’s true … and we can talk about legal rights, but at the end of the day, what this administration is going to do in terms of actually paying costs remains to be seen,” he said. “This is going to change every day,” said Susan Reichle, a retired senior foreign service officer at USAID. “Every single day, they're issuing guidance to correct something that maybe wasn't correct in the initial guidance. And they're just starting the waiver process, where missions will be submitting the waiver requests up to the regional bureaus and to the global bureaus. By 3 p.m., they have to be gathered then to go through the process … with F really being the lead on this.” “F” refers to the Office of Foreign Assistance, which coordinates U.S. foreign aid and provides strategic direction to USAID from the State Department. It also refers to Peter Marocco, the controversial Donald Trump appointee who runs the office and reports to Secretary of State Marco Rubio. “I think Mr. Marocco is the decision-maker, and we're talking to people all around him, including above him, to try to weigh in on that,” Nichols said. “I think the agencies will have some sway and will be feeding information to [his] office, but in terms of actually helping to shape the process … it sits on his desk.” Wong commended colleagues for being proactive despite “the lack of guidance and the raindrop of little emails coming out of the front office.” “But they've been doing this rack and stack, trying to create a priority Excel spreadsheet that gets in front of whoever’s in that front office and then over to the Pete Marocco world,” she said, adding that the work on waivers is getting done, “but they're not quite sure into what void it's going to go.” “One of the things that we’re doing on behalf of a number of clients who banded together is collecting negative, hopefully unintended, consequences and feeding them to Republican lawmakers.” --— Robert Nichols, co-founder and managing partner at Nichols Liu LLP What you can do in the meantime Despite the uncertainty, panelists recommended keeping lines of communication with USAID open — even if no one is answering at the moment — and keeping a paper trail of those communications for when the stop-work orders are lifted, theoretically at least. “Stop does mean stop, but I believe it's important to preserve the work products at that point that you stop and make sure you’ve got full documentation and an audit trail for where you were and what you had done up until that point, because that can be part of your claim after you get a start-work order again,” said David Berteau, president and CEO of the Professional Services Council. And while stop means stop, that doesn’t mean you cease operations completely. “There may come a time where the government will say, ‘OK, we’re ready for you to start again.’ So it’s not only keeping your people on the payroll so that you don’t have to fire them, it’s because you’re going to have to have the capability and capacity to start to work again when the time comes,” Berteau said. “I 100% agree the highest priority has to be business continuity,” said Nichols. “How do you do that? By complying with the government obligations, minimizing your costs, and protecting your cash. [T]hat means getting down into a cash flow analysis to figure out exactly where you need to spend money and where you don’t need to spend money. And we work with several clients to go through, literally, line by line, what can be cut, what can’t be cut.” But not everyone has the luxury of cash reserves to last throughout the three-month review — namely smaller local organizations. “The whole localization agenda, I think, is, I don’t want to say it’s past tense, but they’re going to feel it immediately,” Wong said. Even organizations that may not necessarily go under will feel the pressure — and need to deal with it by openly communicating with staff, Nichols said. “Everybody’s going to be nervous. There are some organizations that simply don’t have the cash flow to keep their staff on and they’re starting layoffs, and that is scaring a lot of other organizations,” he said. “And so our view is to have very direct communications [to show] that leadership is on top of this, doing their best to deal with a difficult situation, and that type of communication hopefully will quell some of the fear that’s out there.” Convincing Congress U.S. lawmakers are another key piece of the puzzle — and aid advocates need to convince them to help get the money flowing again, panelists said. “One of the things that we’re doing on behalf of a number of clients who banded together is collecting negative, hopefully unintended, consequences and feeding them to Republican lawmakers. The Democratic lawmakers have already come out and said this is not good. The Republican lawmakers haven’t done the same,” Nichols said. “So for example, we have a contractor that works in a particular country [and] part of what they do is they guard a weapons armory, and they’ve been told to stand down. And they’ve said, but who’s going to guard the weapons armory? And they’ve been told, not your problem any more. So those are the types of things that I think if Republican lawmakers know about it, they’re going to be more active,” Nichols said. “That’s more of a lobbying effort than a legal effort, per se, but we think it’s necessary right now.” Wong agreed, saying that the State Department and Office of Foreign Assistance could respond to pressure from lawmakers on Capitol Hill. “If there’s Republican senators or their staff saying, ‘We know there's something going on. We have a process. Let’s start seeing some of this. Start briefing us on it’ — I hope Secretary Rubio will still provide his colleagues that courtesy,” Wong said, urging everyone to reach out to members of Congress to create “another pressure point, because I am afraid of the inertia, which may be deliberate.” That gets to what Berteau called the core question, “which is, what’s the intent” of the review? “Is it just to put scalps on the wall of cutting dollars and getting rid of people, or is it actually to define what the priorities are, put those priorities in place, and then focus the efficiency and effectiveness on that? “We may not know the answer to that for some time, and quite frankly, it may be a bit of both,” he said. “I think we all have to operate as if the intent is to create priorities, sort resources against those priorities, and eventually begin to perform again. Because if we go in the other direction, we might as well hang up and go home.”